Premium brands boost drinks industry

01 August 2013

BRUSSELS/LONDON: Effective marketing, the targeting of emerging markets and signs that consumers have been trading up to premium brands have led to strong sales for drinks groups Diageo and Anheuser-Busch InBev.

Belgium-based AB InBev, the world's largest brewer, has announced that, while sales were down in its two biggest markets of Brazil and the US, overall revenues for the second quarter rose 3.9%, boosted by successful new premium products, such as Bud Light Platinum and the margarita-flavoured Bud Light Lime Lima-a-Rita.

Separately, Diageo, the world's biggest distiller, said annual net profits rallied by almost a third and sales grew by 5% to £11.4bn, lifted by strength in the US and emerging markets, which now comprise 42% of the group's business. Its performance in the US was aided by sales of Crown Royal and Bulleit bourbon.

Ivan Menezes, who became Diageo chief executive earlier this month, said: "The effectiveness of our marketing campaigns remains a competitive advantage for us and this year we have seen these campaigns extend the leadership of our brands in many markets during the year."

The company said for the first time that its Johnnie Walker brand sold 20m cases, double what it sold ten years ago, making it the most important spirit brand in the world by value.

Meanwhile, AB Inbev suffered a modest decline of 0.4% sales in Brazil, where it has almost half the beer market, but benefited from good weather and the Confederations Cup football tournament, which boosted volumes by 30m litres.

Felipe Dutra, the company's chief financial officer, described the event as a useful test run for the FIFA football World Cup in 2014, which is being hosted in Brazil and an event that traditionally represents a big opportunity for drinks brands. AB InBev expects volumes to then increase fourfold.